About Redline

Redline is about developing an alternative vision to capitalism. We recognise there is no possibility of building a Marxist working class party in the current conditions in New Zealand of low horizons and little fightback. We aim to use the tools of Marxism to provide analysis of what is going on and, where possible, give a positive lead.

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Imperialism study group

This study group, which is being initiated by some of the people involved in Redline, is primarily concerned with imperialism in the 21st century, but will begin with the first great Marxist work on the subject.

We will be focusing on studying and discussing three books:
V.I. Lenin, Imperialism: the highest stage of capitalism
Tony Norfield, The City: London and the global power of finance
John Smith, Imperialism in the Twenty-First Century: Globalization, Super-Exploitation, and Capitalism’s Final Crisis
You will need copies of these books – or, at least, access to them – to take part in the study group. For further info on the study group, email: redlinemarxists@gmail.com

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British Labour Party leader ‘Red Ed’ has better way to save capitalism

Ed became leader two years ago when he narrowly beat his brother David in the Labour leadership ballot. Ed was regarded as more ‘left’ than his Blairite brother and so was backed by the trade unions to win. He was even dubbed ‘Red Ed’ by the conservative press as a result. Well, Ed has now explained just how ‘left’ he is in an interview.

He says he wants to start “an era of aspiration” just like Margaret Thatcher did in the 1980s when she was in opposition. It’s not a good start to echo Thatcher, whose aspirations were to destroy the British welfare state of public services, employment rights, benefits and pensions and replace it with ‘free markets’, ‘competition’ and ‘freedom’ for businesses to grow and make profits without heavy regulation and taxes. In other words, the neo-liberal agenda. Anyway, Ed tells us that, like Thatcher, there is “an explanation for me”.

What is Ed’s explanation or aspiration for the British people on how they should organise their economy and society? Well, lo and behold, it is capitalism; it is about “the free market working properly”! So not much different than Thatcher then? The interviewer points out that such a view would make Ed’s father, Ralph Miliband, a well-respected Marxist academic in his time, turn in his grave. Yes, says Ed, “my dad was sceptical of all that Thatcher aspirational stuff. But I felt you sort of had to recognise that what she was talking about struck a chord. I want to save capitalism from itself.”

Apparently, what Ed wants us to aspire to is “responsible capitalism”. The ‘creativity’ of capitalism should be allowed to flourish in ‘free markets’, but within rules to ensure that it is not ‘irresponsible’ and is made “more decent” and “humane” . The interviewer asks him if that is not a contradiction in terms. Ed replies apologetically, that “capitalism is the least worst system we’ve got”, so there is no alternative than to try and make it work. “We need to get the private sector working with government”, Scandinavia-style.

It’s irrefutable that capitalism is the least worst system we have got, as there is no other in practice. It is the dominant mode of production and social relations, given that slave and feudal societies have more or less disappeared from the globe. But is that all we can aspire to: this ‘least worst’ system with its wars, disease, inequalities, injustices and exploitation? Sure, all previous class-based societies had these calamities, but is capitalism the only existence ahead for the human race?

He tells us that socialism cannot replace capitalism because “we’ve learnt that the state is no good at running, say, the car business.” Did he not notice the collapse of the US car industry during the Great Recession, which led to a multi-billion bailout of General Motors, Chrysler and Ford, with the US state still owning a sizeable portion of these ‘well-run’ capitalist car companies? Is he not aware that the largest automotive industry in the world is in China, where all car companies are joint ventures, with the state holding the dominant share with the likes of Volkswagen, or are even fully state-owned?

He says that we need the ‘creativity’ of capitalism to develop things like smart phones and Ipads. He forgets that most of the great innovations of the last century that have benefited humankind were not the result of capitalist investment for profit, but funding from the state or from academic work for its own sake. The internet, most medical discoveries and accompanying treatments for such as cholera, malaria, smallpox, TB etc, electricity, nuclear fission etc all came from non-capitalist investment (often military funding). Major progress in health and life expectancy came from better water and sewage, electricity etc, – all developed by state funds. I could go on. Sure, capitalism then appropriated these innovations for capital accumulation (most inventors have not benefited personally). But without disinterested (not for profit) research and state funds, human progress would have been much slower (see my recent post, Crisis or breakdown?, on how capitalism is increasingly failing to deliver on ‘creativity’).

Miliband recognises that capitalism can produce inequalities and injustices. But he says there is nothing wrong with getting rich “if you make it the hard way”. The trouble is that all the statistical evidence shows that most rich people became so either because they inherited wealth, or were given a big start by their parents owning a company or having money, or they did it by trickery and luck (Russian oligarchs spring to mind here).

It’s true, admits Miliband, that the “scale of inequality scars our society.” But he says we cannot tax the rich more. The current top rate of personal income tax of 50% in the UK for all those ‘earning’ over £150,000 a year ($250,000) “is pretty much the limit”. He does not say why, but presumably because anything higher will discourage the ‘creativity’ and ‘entrepreneurship’ of the rich. Well, a top rate of 50% is going to do little to change the ‘scale of inequality’ in the US or the UK, which evidence shows is rising ever more. Miliband forgets that, during the golden age of capitalist growth in the 1950s, the top marginal rate of personal income tax in both the UK and the US was way higher than 50%. Indeed, under Eisenhower it was as high as 90% for the very rich. And most recent studies show that a marginal rate of up to 80% would still be effective in reducing inequality without being self-defeating and reducing government revenues.

Surely, a progressive income tax should be a basic objective of any fair society? It seems that it is not an ‘aspiration’ for Ed Miliband. He wants “predistribution” rather than ‘redistribution’, a living wage rather than taxes and ‘handouts’. So the answer is not a fairer tax system or a welfare state, but higher wages – growth not distribution. He may have a point here. The problem is that capitalism cannot deliver even that. The financial crash and the Great Recession have confirmed that boom and slump is the very nature of capitalist ‘growth’. Capitalism is not delivering higher incomes for the majority. On the contrary, real incomes for average households are falling. Indeed, real median household incomes have been stagnant in the US for 30 years! So much for ‘predistribution’.

So how do we avoid another financial crash? Miliband admits that the old “consensus around light touch regulation turned out to be really problematic”! And we were “too easy and accepting” about globalisation. But the main lesson of the financial crash is that we have ‘too many banks’. We need to create more competition in banking and, for that matter, in other industries like energy, where six companies control all in the UK. Apparently, Miliband wants to replace these oligopolies by lots of smaller banks and electricity companies. Is he serious? This is nothing more that the pipe dream of extreme free marketeers. In 1997, the Conservative government in Britain privatised the state railway and broke it up into ‘franchises’ for which firms were supposed to ‘compete’ for the right to run different routes. It has led to total chaos, hugely expensive subsidies from the state and now, ironically, to consolidation back into a few firms with 30 year ‘franchises’ to ensure stability and profits.

The idea that we can break up the big banks and electricity companies into small competing units to make the free market ‘work properly’ is an expensive illusion. Alternatively, replacing private oligopolies with democratically-run, publicly-owned banks, railways and utilities would actually deliver what Miliband says he aspires to, namely “a company that is not accountable just to its owner, but to its workers and its customers”.

In his interview, Miliband referred to the claim of Anthony Crosland, the pro-capitalist Labour leader of the 1950s, who argued that capitalism had changed fundamentally into something mild and benign. Back then,Crosland said that “bosses no longer felt they could pay themselves whatever they liked”. At least Crosland had a semblance of justification for reckoning that capitalism had changed for the better in the 1960s when economic growth was high and equality of income and wealth was better. But as Ed says, plaintively, “what on earth has happened between then and now?”. It’s a good question. Capitalism has failed to deliver on growth, and inequality and injustice have got even worse. So capitalism had not ‘fundamentally’ changed, as Crosland claimed; it just got worse. Thatcher, her ‘aspirations’ and neo-liberalism tried to ‘save’ it at the expense of the majority, but the Great Recession shows she failed.

Capitalism is the same old beast, but Miliband continues with his aspiration of having a ‘market economy, but not a market society’. That means capitalism without capitalism. But for Ed, ‘there is no alternative’, to use an aphorism of Thatcher, to a market economy. Miliband says that socialism should not be a ‘rigid economic doctrine’, but a ‘set of values’. Well, socialism is neither rigid, nor solely economic. But leave that aside. Is not capitalism a rigid economic doctrine in the same way that Miliband implies socialism is, with its fixed axioms like ‘free markets’, ‘competition’, ‘profit leads to prosperity for all’ etc, none of which bear any relation to reality or to morality?

Miliband admits that the current crisis of capitalism is so deep that people are totally disillusioned with it and “politicians cannot do anything about it”. But nevertheless, he wants to make an attempt to do something to make capitalism palatable. Rather than recognise what the majority of people have learnt, that capitalism does not work, he persists on wanting to make it so. So we have a Labour leader ten points ahead in the polls, with the public totally fed up with the banks and the capitalist system, who says that his main aspiration is to save capitalism from itself. Maybe ‘Red Ed’ ought to get a knighthood before Andy Murray.

The above piece first appeared on Sunday (Sept 16) on Michael’s excellent blog, the next recession.